More than 42 percent of Palm Beach County’s homesteaded property owners might be in for a surprise when they get their property tax bills this year, Property Appraiser Gary Nikolits warned Thursday.
Even though property values plummeted last year, at least 150,000 property owners are going to see their homestead’s assessed value go up, according to estimates by Nikolits’ office.
That’s because the same Save Our Homes Amendment that has limited homestead owners’ assessment increases to no more than 3 percent a year since it was passed in 1992, no matter how high their property value shot up, has a down side too.
And that is: If a homesteaded property’s market value drops but still remains higher than its assessed value, then the appraiser’s office must increase the assessed value by the lower of either the state’s consumer price index or 3 percent. This year’s increase will be 2.7 percent.
Unless local governments lower their tax rates, that assessment increase probably means a tax increase for many longtime homeowners.
But with the county and its cities and towns facing large budget shortfalls, it is unlikely many local governments will trim their rates to offset the increase, Nikolits said.
“It basically means their taxes will go up this year,” Nikolits said. “Most taxing authorities are going to adopt a tax rate that is higher than their current rate.”
Meanwhile, 45,000 homestead owners will see their tax shields created by the Save Our Homes Amendment vanish this year, Nikolits said. The increase in their property’s assessed value, coupled with a drop in market value, will likely wipe away the tax savings those homeowners have received from the amendment, which was created to keep the assessed values of homestead properties artificially low to avoid huge tax increases caused by a booming housing market.
“Obviously it is going to be a shock for taxpayers,” said Robert Weissert, a spokesman for the non-profit group TaxWatch, which has been critical of the Save Our Homes Amendment. The group says the amendment has created two classes of taxpayers.
“This all comes back to the fact that Florida families are struggling,” Weissert said. “It really is going to be an unwelcomed surprise at the worst possible time.”
Palm Beach County commissioners have already started bracing for a shortfall for the budget year that will begin Oct. 1. In an unprecedented move, commissioners held a series of early budget work sessions last year, just weeks after approving their 2009-10 spending plan, to prepare to cut expenses for 2010-2011.
County budget managers estimate the county will face as much as a $117.6 million shortfall if commissioners keep the tax rate the same as this year’s $4.34 per $1,000 of taxable value.
A rate of $4.93, a 13.6 percent increase over this year’s rate, would give the county the same amount of property tax revenue as this budget year, but would leave it with a $51.2 million shortfall because other revenue is down, debt service costs are up and it has less in reserves, which it used this year to help fund the budget.
If commissioners keep the rate flat, the owner of a $200,000 home with a $50,000 homestead exemption would pay about $23 more next year in county property taxes. That figure assumes the assessed value of the property increased by 2.7 percent.
At the $4.93 rate, that same homeowner would pay $115 more next year, assuming the same 2.7 percent jump in the property’s assessed value.
Those figures do not include taxes paid to other taxing agencies including cities and the school district.
In West Palm Beach, for example, the city commission is also bracing for cuts. If the city keeps its tax rate flat, finance managers estimate the city will face a $10 million to $12 million shortfall for the 2010-11 budget year, officials said.
Copyright © 2010 The Palm Beach Post, Fla.,
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